Gold & Silver Digest: 1/10/13

Adam Taggart
By Adam Taggart on Thu, Jan 10, 2013 - 9:54pm

The Gold & Silver Digest contains headlines of stories that members of this group deem relevant and/or interesting to precious metals enthusiasts.

If you have articles to submit for the next digest, please email them to me by clicking here.

1/10/13 US close metals price quotes from Finviz

Reuters: Gold tops $1,675 on ECB comments; PGMs up on China

NEW YORK, Jan 10 (Reuters) - Gold rose 1 percent to $1,675 an ounce on Thursday, notching its biggest one-day gain in 2013, as signs that the European Central Bank will not cut interest rates any time soon boosted bullion buying.

Platinum group metals (PGMs) also climbed 2 percent as encouraging Chinese export-growth data triggered broad gains in industrial commodities and equities. Recent improvement in U.S. vehicle sales also boosted demand for the PGMs largely consumed as autocatalytic converters, traders said.

Harvey Organ's Gold & Silver Report

USA dollar tumbles as Euro rises to 1.3252/Spanish 10 year bonds fall in yield to below 5%/Greek unemployment skyrockets to 26.8%/Italian bad loans rise 16.7% to 121.7 billion euros

Gold closed up $22.50 to finish the comex session at $1677.30  Silver also had a fine day rising by 66 cents to close the day at $31.88. Gold rose as the dollar sank with the Euro rising by .0199 to finish the session at 1.3252.  Spanish bonds are now under 5% with a successful auction.  However Greek unemployment exploded northbound at 26.8% with youth unemployment hovering around 56.5%.  Italian bad loans rose by a whopping 16.7% to 121.7 billion euros.  We will go over these and other stories but first..................

Bloomberg: Yen Drops to 2010 Low on Stimulus Bets, Deficit Concern

The yen touched the weakest level since June 2010 against the dollar on speculation the Bank of Japan (8301) will cooperate with Prime Minister Shinzo Abe’s government to ramp up efforts to stimulate the economy.

Japan’s currency extended its ninth week of declines after posting wider-than-expected current account and trade deficits. Demand for the yen was also limited as the BOJ may increase its fiscal 2014 inflation forecast at this month’s policy meeting. The euro remained higher against the greenback after yesterday’s biggest gain in five months before a report that may show the region’s industrial output increased.

Peak Prosperity: More Limits Coming Soon on Selling Precious Metals?

If passed, this Act will reduce the anonymity of precious metals transactions for the retail bullion investor. Records of identity, proof-of-ownership and transaction details will be kept for up to five years - reports of which will be made available to law enforcement on a daily basis.

I am less certain by what is meant by "a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash". How are they proposing sellers be paid? (the bill does not specify)

The Wall Street Journal: Is Gold’s Bull Run Running Out of Steam?

As question marks begin to be raised over the longevity of gold’s 12-year bull run, the list of banks rejigging their gold price forecasts is growing.

Both Deutsche Bank DBK.XE +1.24% and Société Générale jumped on the bandwagon this week, cutting their average 2013 price forecasts for gold by 12.1% and 5.6% respectively. Deutsche Bank now sees gold averaging $1,865/oz in 2013, while Société Générale expects a more modest price of $1,700/oz. The banks’ downgrades follow similar revisions by the likes of Credit Suisse CSGN.VX +0.48% HSBC HSBA.LN +0.52% BNP Paribas BNP.FR -0.14% and Goldman Sachs GS +2.27%.

Last year, gold averaged around $1,670/oz. In Europe Thursday, the metal was trading at roughly $1,660/oz.

Seeking Alpha: Short Gold In 2013

There are significant challenges to gold prices increasing in 2013. In fact, I believe that gold prices should move down in 2013 because of five strong headwinds, elaborated in this article.

1. Poor Demand

Nearly 50% of world gold demand comes from India and China. Demand in India is down because of concerted efforts from the government to push down gold imports. The government of India has restricted banks from issuing loans to buy gold, and has been steadily increasing the custom import duty on gold. At the same time, demand in China is down as the economy remains weak, putting pressure on discretionary income. Inflation expectations are low and equities seem ready for a rebound in 2013, drawing investments away from gold.

2. Increased Supply

Just when demand is falling for gold, supply of gold is expected to go up in 2013.

Marketplace Business: The golden business of gold vaults

Gold prices are down from their 2011 peak, but still more than quadruple the value a decade ago. Investors skittish about currency values or other uncertainty have flocked to gold in recent years, meaning demand for high-security gold storage is soaring. The growing hunger for gold is driving a shift in where it’s stored, with growth happening outside established centers in Zurich, New York and London. This is proving to be good news for high-security transport and storage companies.

A beneficiary of these trends is housed in a simple brick building in Wilmington, Del. On a fairly busy road near an auto parts store and pharmacy, the Delaware Depository Service Company’s offices are as unremarkable as its facade.

South China Morning Post: Silver expected to outshine gold

Silver is expected to appreciate more than gold this year but traders warn investors may risk getting burned because of the high volatility in the thinly traded metal.

"Silver is now trading at a much lower level than its normal difference from gold. As such, we can predict silver will rise further this year," Chinese Gold & Silver Exchange Society president Haywood Cheung Tak-hay told the South China Morning Post.

Investment U: Sell Gold, Buy Timber

No question, gold has had a nice run.

It’s been up 12 consecutive years. And during this period, gold prices are up around 500%. This is probably why in 2012, 84% of new cash invested in commodities went into gold funds.

But these investors would have done far better if they had invested in another commodity that we use every day. One that beat gold by 567% in 2012.

Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.

2 Comments

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3102
OMFIF Report Advocates Gold Remonetization

From John Butler via FinancialSense:

In a report published today, the Official Monetary and Financial Institutions Forum (OMFIF), a global organization of central banks and sovereign wealth funds, recommends that gold be remonetized for use as international money, alongside major currencies. OMFIF gives a number of reasons for this but they boil down it to gold's historical role in establishing and maintaining confidence and stability in international monetary relations. Such confidence and stability have dramatically declined as a result of the global financial crisis that began in 2008, to the detriment of the global economy. Falling back on the solid foundation of gold is the best available way to eventually move forward with healthy and sustainable growth in global trade, to all countries' mutual benefit, and to bring an end to the escalating 'currency wars' that increasingly threaten the global economy.

The link to the report, Gold, the Renminbi and the Multi-Currency Reserve System, can be found here.

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3102
Your regularly scheduled Friday Precious Metals smackdown

Right on schedule....

And this despite dollar weakness today and a slightly positive day for equities.

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